Artko Capital LP, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 0.5% was delivered by the fund for the second quarter of 2021, underperforming the S&P 500 Index, the Russell 2000, and Russell Microcap Index, which delivered an 8.6%, 4.3%, and 4.1% return respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Artko Capital, the fund mentioned Hudson Technologies, Inc. (NASDAQ: HDSN) and discussed its stance on the firm. Hudson Technologies, Inc. is a Pearl River, New York-based commercial and industrial chiller plants and refrigeration systems solutions provider with a $147.8 million market capitalization. HDSN delivered a 209.17% return since the beginning of the year, while its 12-month returns are up by 195.61%. The stock closed at $3.37 per share on September 23, 2021.
Here is what Artko Capital has to say about Hudson Technologies, Inc. in its Q2 2021 investor letter:
“There is of course the other side of the coin as microcaps can also crash spectacularly after a substantial run up, such as our investments in Hudson Technologies (HDSN) where taking our gains off the table after the run up resulted in us having a positive return on those investments and limited our losses. This is a delicate balance of adjusting the process without taking additional risks. Over the years our portfolio has had a pretty modest turnover, with an average holding period of around three years, and one of our goals in adjusting the process is to lengthen the average holding period to closer to five years and beyond. With that adjustment, we will also likely adjust our maximum single position sizing to high teens from 15% today and make our reduction sizes smaller.”
Based on our calculations, Hudson Technologies, Inc. (NASDAQ: HDSN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. HDSN was in 6 hedge fund portfolios at the end of the first half of 2021, compared to 3 funds in the previous quarter. Hudson Technologies, Inc. (NASDAQ: HDSN) delivered a 5.64% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
